Parkhurst Needs to Retake Econ 001

Dartmouth must change its MDF initiative if it wants to keep more money in the piggy bank.

One surprisingly warm January night in Hanover, Marcus, Shawn, and Jonny found themselves sauntering across campus in eager anticipation. It was Friday, the weekend had finally arrived, and each young man simply wished to enjoy a few hours of fun and leisure. When Shawn had logged into his Blitz earlier that day and read an email from the campus-events listserv, he had learned of a concert being held at Sarner Underground. The colorful text and the vibrant photos in the email, the offers for free snacks and drinks, and the promise of live music and an open dance floor immediately seized Shawn’s attention, and he had decided to invite his friends Marcus and Jonny to accompany him to the concert.

“I thought college would be all stress and studying,” announced Jonny, as the three boys walked down the road.

“I wonder if there will be girls there…heehee,” mused Shawn.

“Don’t get too excited,” warned Marcus.

Shawn wrapped his fingers around the handle of the door to Sarner Underground and paused for a moment to relish what was to come. He imagined himself walking into a dark room checkered with the light from a disco ball, the booming music immediately overwhelming his ears. From wall to wall, the room would be packed with other Dartmouth students all constantly bumping against each other in a relentless excitement to outmatch each other’s dance moves.

What Shawn really observed, though, was quite the opposite. The music had a slow, lulling beat. There were so few occupants that each could wave his or her arms around freely without any risk of accidentally jabbing another person nearby. Worst of all, the intended dance floor was more akin to a designated standing area within which each inhabitant seemingly had his or her feet glued to the ground.

Shawn and Jonny had been paralyzed with far too much disbelief and disappointment to evacuate themselves from the dismal party. Marcus thus took it upon himself to lead the two boys, heads hanging low, back outside.

“One day, one day, you freshman will wisen up,” Marcus declared.

That January night was a manifestation of merely one form of Parkhurst’s profligate spending tendencies. Indeed, the College spends far too much money purchasing snacks and beer, setting up, managing and cleaning up venues, and hiring entertainment (and sometimes even providing them with equipment) all for events that scarcely anyone will attend.

Groups such as Friday Night Rock (FNR) which organize College-sponsored social events, such as the aforementioned concert, stem from Hanlon’s defective “Moving Dartmouth Forward” initiative. When the plan was initially implemented, Parkhurst allocated upwards of $800,000 annually to a variety of programming boards similar to FNR. After observing that the majority of the sponsored social events received very poor attendance, Hanlon decided to act, and he responded quite interestingly. Indeed, one section of the Second Annual Moving Dartmouth Forward Review Panel Report reads, “the President has committed additional resources to enable the Collis Center to fund more student initiated social events open to the entire student community.” Exactly the type of tactfulness one would expect from Parkhurst. The evidence demonstrates that students prefer the Greek scene to the “inclusive” and “diverse” College-sponsored events. Furthermore, fraternities and sororities purchase their own drinks and they manage and clean their own venues; the Greek scene puts much less stress on the College’s pocketbook than do these “student initiated social events.” And yet, despite these simple observations, President Hanlon judicially concluded that we should allocate more funding to these events. The fact that we now find ourselves in the midst of a financial crisis shouldn’t come as a surprise.

Here’s an overview of said crisis: Dartmouth College’s streak of operating at a loss has continued once again with the termination of the previous fiscal year. Last year the college operated at a loss of $126 million, a substantial jump from the 15.2 million dollar loss they experienced in 2015. These losses stem from a decrease in revenue accompanied by an increase in expenses: a bad financial recipe.

Dartmouth’s primary streams of revenue stem from tuition and fees, government and corporate grants, and alumni donations. As the latter two forms of revenue have become stagnant in recent years, Dartmouth has begun to put more burden on its students to maintain the College’s revenue. Last year only 44% of Dartmouth’s alumni donated, as compared to other Ivy League institutions like Princeton where 63% of alumni gave money. Dartmouth’s low donation rate led their endowment to shrink by $189 million over 2016. Government and corporate research support has also been lagging as well, remaining fairly stagnant over the past years at around $183 million. With these streams of revenue embarrassingly low, Dartmouth has turned to students to fill their revenue void. In 2013 when Phil Hanlon took over the office of President of the College tuition and fees were $58,000. Three years later in present time, tuition and fees are now $66,200, making Dartmouth one of the most expensive colleges in the United States. In total, Dartmouth garnered $199 million in tuition revenue in 2016. The fact that more of Dartmouth’s revenue comes from tuition rather than grants is concerning. Most other research universities obtain much more money in grants; so much so that their grant money exceeds their revenue from tuition. Dartmouth is either being skimmed out of grant money, or not actively pursuing grants. It seems as though Dartmouth would rather take the simpler route of increasing costs for students. When combined, these lagging revenue streams, have led to a decrease in revenue by $20 million or 2% for Dartmouth in the 2016 fiscal year.

Parkhurst, very tactfully, has greeted the financial crisis with more prodigal habits. In the 2016 fiscal year, Dartmouth expenses rose by 3% or $27 million to $918.1 million. With the decrease in revenue for 2016, Dartmouth needed an additional outlet to pay for their expenses. Thus they decided to sell $250 million in bonds, increasing their total outstanding debt to $1.25 billion. One would assume that Dartmouth is increasing their expenses to better the human body, and putting their money to good use; this couldn’t be farther from the truth.

First and foremost, Dartmouth’s increased expenses can’t be attributed to their generous pay of professors, as they pay their professors poorly. In 2016, a tenure track faculty member at Dartmouth earned only $177,000. This number is nearly $15,000 below the average pay of Ivy League faculty members, making the recruitment of talented faculty difficult. So if the administration is not spending money on faculty, then what are they spending it on? This is where we begin to encounter our problem.

Dartmouth’s housing communities have been a money hole. Beyond the cost of new social spaces, the administration has allocated each house $1 million for social events. Not surprisingly, house community programming has seen very similar results to those of the aforementioned College-sponsored events—poor attendance, wasted food and drink, etc.—but the money squandered on programming pales in comparison to the profligacy of other portions of the housing system. With the establishment of the housing communities, the administration thought it would be a good idea to build the housing community professors new homes. Dartmouth ended up paying $4 million, or $650,000 each, to construct 6 homes: one for each housing professor. Some have actually had the ability to step inside one of these homes; one is instantly awestruck by the ornate hard wood flooring, a wood carved fire place, sleek modern furniture, granite counter-tops, and much more. Houses are state of the art, and all paid for by Dartmouth. The homes for the housing professors are far nicer than they need to be. Instead of budgeting $650,000, to build these homes, they could have easily been built for $400,000. The only silver lining to this is that at least the College’s money is going to professors, not more unpopular initiatives and expanded bureaucracy. These new homes are not even getting the use that the administration believed they would get. It was thought that the homes of the housing professors would be “safe spaces,” to be used for performances, and small intimate talks. Many of these events have not been realized. Instead the homes have become private to the house professors.

Ultimately, we can point our fingers towards Hanlon’s “Moving Dartmouth Forward” initiative as an increasingly significant source of financial bungling. Indeed, the new housing community programs, the homes of house professors, and the Collis Center social events, each rife with fiscal mismanagement, place substantial stress on the College’s budget during a time when parsimony is most imperative. 

The driving idea behind the study of economics is the concept of scarcity—the fact that there exist infinite human wants on a planet with limited resources. Thus, it is imperative that we allocate our resources prudently. Instead of misusing them on unmerited, gratuitous initiatives, Dartmouth should direct its funds towards providing more financial aid so that more deserving, lower-income students may attend without financial worries. Or towards funding more intricate research projects for professors. Or towards training tutors more rigorously so that they may better assist their clients. The possibilities are limitless and the benefits could be two-fold. Undoubtedly our alumni would contribute more if they had confidence their money would go to worthwhile initiatives.

The burden falls to all subordinates to recognize that, when a leader proves his incompetence, they must seek change, or at the very least, recognize when projects such as MDF have failed.